Home Mortgage Disclosure Act (HMDA)/Reg C
This question is more complicated than it may initially appear. Regulation C sets the "25 or more closed-end loans and 100 open-end loans or more thresholds" for determining applicable financial institutions, based on loans "originated". Only one institution can ever consider the transaction as originated, but the number of times a loan could be reported as purchased would be unlimited, if bought and sold multiple times on the secondary market.
The answer is dependent upon whether the loan is truly considered "originated" or "purchased". This is determined by when the loan is purchased, and whether the reporting institution was involved in the credit decision. For example, if an institution makes the credit decision on a loan request, the loan is subsequently closed, and the same institution purchases the loan following the closing; this loan is considered originated and not purchased. Commentary under Regulation C provides several examples regarding when a loan is considered originated versus purchased. You should rely on your legal counsel or compliance experts, if unsure regarding this distinction. That being said, Commentary under Regulation C also clarifies when a loan is clearly considered purchased and not originated, such as:
Clearly Purchased - If covered loans are acquired in bulk from another institution (for example, from the receiver for a failed institution), but no merger or acquisition of an institution, or acquisition of a branch office, is involved, the acquiring financial institution reports the covered loans as purchased loans (Commentary ¶4(g)-1ii).
Therefore in response to the original question asked; if the number of transactions involving open-end lines of credit total 100 or more and are considered originated - yes, it meets this benchmark. If the loans are considered purchased - no, they would not meet this benchmark.
***NOTE - The most recent final rule amends the 100 open-end lines of credit to temporarily increase this figure to 500 open-end lines of credit, so insert 500 rather than 100 for the years of 2018 & 2019)***
There is no specific definition regarding a "purchased loan" or "purchasing entity" under Regulation C; however, generally this refers to a loan bought/acquired by an entity that did not make the credit decision for granting the original loan request. For information regarding the differences between originating a loan and purchasing a loan, refer to the commentary provided in the regulation (citations are provided below).
A purchased loan is generally a closed-end mortgage loan or an open-end line of credit that is acquired from another entity where the entity purchasing the loan was not the entity making the original credit decision at the time the loan was originated. The date of October 3, 2015 (the effective date of integrated mortgage disclosures under the Truth in Lending Act) is used for excluding the reporting of specific data fields (to be indicated as not applicable) when a loan is purchased and the loan application was taken prior to this date.
In other words, if the loan application was taken prior to October 3, 2015 and the loan is reported as purchased, the following data fields are indicated as not applicable: Total Loan Costs; Borrower-Paid Costs; Discount Points; and Lender Credits.
There is no specific definition regarding a "purchased loan" or "purchasing entity" under Regulation C; however, this refers to the entity buying/acquiring the covered loan (unless it is the entity making the original credit decision) and not the entity selling the covered loan. For information regarding the differences between originating a loan and purchasing a loan, refer to the commentary provided in the regulation (citations are provided below).
Disclaimer: These questions and answers are provided based on those received during webinars provided by the ICE Mortgage Technology Compliance Department, and those submitted to ICE Mortgage Technology directly by you. This content is intended for general information purposes with the goal of assisting ICE Mortgage Technology’s customers and non-customers, in complying with the future provisions under Regulation C (HMDA). This information is provided as a courtesy to ICE Mortgage Technology’s customers and ICE Mortgage Technology makes no representation or warranty regarding the accuracy of the information set forth herein, and you may not rely on this information to ensure your company’s compliance with Regulation C (HMDA). This publication should not be construed as legal advice or opinion on any specific facts or circumstances, including the application of the HMDA regulations. You are advised to consult your own compliance staff or attorney regarding your specific residential mortgage lending questions or situation to ensure your compliance with all applicable laws and regulations.